Sports Direct buys 11% French Connection stake
Another day, another French Connection story. It has emerged that the mystery buyer who snapped up a major stake in the embattled fashion retailer late yesterday was none other than Sports Direct.
The purchase came after Schroders, which had been the firm’s second-biggest shareholder sold its entire 9.27% stake. The biggest shareholder is Stephen Marks, who has a 42% stake.
French Connection shares are lumbering below 40p at present, having been as high as 90p in May 2014. The company has faced years of falling sales and losses and has been under pressure from a trio of activist investors who hold a 15% stake between them.
They have complained about a number of issues from Stephen Marks holding both the CEO and chairman roles, to the position of two long-serving independent directors and the firm’s slowness in striking more licensing deals.
A stock market filing shows that Sports Direct has acquired an 11% stake in total via a complex method known as a contract for differences, a strategy it has previously used to build up holdings in Debenhams and Tesco.
Schroders had been an long-term investor in the company and the sale of its stake led to speculation about a potential takeover offer for the company.
It is unclear whether Sports Direct boss Mike Ashley would be interested in making a bid for the retailer. He has a record of building up strategic stakes in retail firms without showing any desire to control them.
But he also has a history of buying struggling brands and his ownership of the Flannels higher-end fashion business shows that he is prepared to diversify out of his core low-cost sports business.
Copyright © 2021 FashionNetwork.com All rights reserved.